Luis Davis, Trustee of the Davis Family Blanco Road Property Trust v. Canyon Creek Estates Homeowners Association ( 2011 )

OPINION
No. 04-10-00725-CV
Luis DAVIS, Trustee of the Davis Family Blanco Road Property Trust,
Appellant
v.
CANYON CREEK ESTATES HOMEOWNERS ASSOCIATION, et al.
Appellees
From the 224th Judicial District Court, Bexar County, Texas
Trial Court No. 2006-CI-12456
Honorable Martha Tanner, Judge Presiding 1
Opinion by: Marialyn Barnard, Justice
Sitting: Karen Angelini, Justice
Steven C. Hilbig, Justice, concurring in the judgment only
Marialyn Barnard, Justice
Delivered and Filed: July 13, 2011
AFFIRMED IN PART; REVERSED AND RENDERED IN PART
This is an appeal by Luis Davis, Trustee of the Davis Family Blanco Road Property Trust
(“the Trust”) from a trial court’s order granting summary judgment in favor of Canyon Creek
Estates Homeowners Association (“the Association”) in a case involving restrictive covenants.
1
On original appeal, the Honorable Karen Pozza presided over the hearing on the motion to allow service by
electronic mail and signed the order granting the motion. The Honorable Peter Sakai presided over the hearing on
the motion to dismiss and signed the order granting the motion to dismiss with prejudice. The Honorable Gloria
Saldana signed the agreed partial summary judgment order. The Honorable Karen Pozza signed the order denying
the request for sanctions. The Honorable David A. Berchelmann Jr. signed the final judgment. After remand, and
relative to this appeal, The Honorable Janet Littlejohn signed the order granting the supplemental motion for
summary judgment. The Honorable Martha Tanner presided over the hearing on attorney’s fees and signed the final
judgment.
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This case was previously appealed to this court, and we affirmed the trial court’s partial
summary judgment order. See Davis Family Blanco Rd. Prop. Trust v. Canyon Creek Estates
Homeowners Ass’n, No. 04-09-00007-CV, 2009 WL 3382232, *5 (Tex. App.—San Antonio Oct.
21, 2009, no pet.). We remanded the matter to the trial court for further proceedings on the
Trust’s claims that were not disposed of in the partial summary judgment order. Id. In response
to our affirmance and remand, the Association filed for summary judgment on the claims it
alleged remained and also filed a counterclaim through which it sought attorney’s fees. The trial
court granted summary judgment in favor of the Association and awarded the requested
attorney’s fees. On appeal, the Trust contends the trial court erred in: (1) granting summary
judgment in favor of the Association, and (2) awarding the Association attorney’s fees. We
affirm in part and reverse and render in part.
FACTUAL AND PROCEDURAL BACKGROUND
In 1957, Valley View Heights, a subdivision located along Blanco Road in San Antonio,
Texas, adopted and recorded restrictive covenants pertaining to lots within the subdivision. The
covenants mandated that property in the subdivision “shall be used for residence purposes only.”
The covenants further provided they were “to run with the land” and “shall continue in full force
and effect until revoked or modified by owners of more than one-half of the property.” The
Valley View Heights subdivision was later expanded and incorporated into a larger subdivision
renamed Canyon Creek Estates. Canyon Creek Estates consists of approximately thirty-five
single-family homes. In 1963, Canyon Creek Estates adopted the 1957 restrictive covenants,
reaffirming that property within the subdivision was restricted to residential use.
In 1997, Edward and Rosaura Davis, who are the parents of Luis Davis, acquired Lot 8 in
the Canyon Creek Estates subdivision. Luis Davis and his brother moved into the home on Lot
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8, residing there for several years. In March of 2000, Elare Partners, Ltd. (“Elare”) acquired
Lots 6 and 7, which adjoined Lot 8. Elare is a partnership controlled by the Davis family, and
Edward Davis is the general partner. Lots 6, 7, and 8, along with several other lots, front Blanco
Road. After Elare purchased Lots 6 and 7, Luis Davis moved into the home on those lots with
his wife and stepson.
In 2001, Canyon Creek Estates recorded a document entitled “Canyon Creek Estates
Homeowners Association Covenants and Restrictions,” which adopted the 1957 and 1963
restrictive covenants, reaffirming that property within the subdivision was restricted to
residential use. This document also contained other changes, but those are not relevant to this
appeal. The document was recorded after the Association, in 1997, sent a ballot to all thirty-five
homeowners in the subdivision with the proposed covenants and restrictions. The record shows
that twenty-seven ballots were returned, i.e., a majority of the homeowners voted, and only six
opposed the revised covenants and restrictions. Therefore, as required by the 1957 and 1963
restrictive covenants, more than fifty percent of the property owners approved the revised
covenants and restrictions.
In 2005, Luis Davis purchased a home in the interior of the subdivision and moved his
family to that home. Around the same time, Luis Davis’s brother and his brother’s family moved
out of the home on Lot 8. In October 2005, the properties were listed for sale by the parents and
Elare as residential properties; however, the properties were taken off the market on March 2,
2006. There was some interest in the properties, but according to Davis, after those interested
determined the properties were restricted to residential use pursuant to a covenant, their interest
waned.
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According to documents produced during the initial litigation, Edward and Rosaura Davis
and Elare sold their properties on Blanco Road to “Luis Davis, Trustee of the Davis Family
Blanco Road Property Trust” on August 13, 2006, by general warranty deed. Though the deeds
state the date of sale as August 13, 2006, the day before suit was filed, neither deed was
notarized until January 31, 2008, and neither deed was produced until the Trust filed a response
to a November 26, 2008 motion for sanctions, which sought sanctions based on the Trust’s
alleged lack of ownership, and therefore lack of standing to file suit.
On August 14, 2006, after failing to sell the properties, the Trust itself brought suit
against the Association and the individual property owners within Canyon Creek Estates. The
Trust sought a declaratory judgment that the property within the subdivision should no longer be
burdened by restrictive covenants limiting the use of the property to residential purposes. The
petition asserted the Trust owned lots 6, 7, and 8 in the subdivision. The petition alleged, in
essence: (1) the 2001 restrictive covenants were null and void because they were signed only by
the Association’s officers and directors rather than by a majority of the property owners; or (2)
circumstances and conditions had so changed such that the lots located on Blanco Road should
no longer be restricted to residential use as set forth in the 1957, 1963, and 2001 covenants.
The Association answered, and thereafter, on January 3, 2008, filed a plea in abatement
and a plea to the jurisdiction. The Association asserted the Trust lacked the legal capacity to be a
party to the lawsuit, noting that the proper party would be the trustee of the Trust. The
Association also asserted the Trust did not own property in the subdivision, i.e., Lots 6, 7, and 8
were owned by Edward and Rosaura Davis and Elare, and therefore, the Trust lacked standing to
request declaratory relief. See Ski Masters of Tex., LLC v. Heinemeyer, 269 S.W.3d 662, 667-69
(Tex. App.—San Antonio 2008, no pet.) (holding one must own property in subdivision to have
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standing to seek declaratory relief regarding enforceability of restrictive covenants). The trial
court granted the plea, but gave the Trust time to “file an amended petition adding the correct
property owners as plaintiffs.” In response, the Trust filed an amended petition naming the
plaintiff as Luis Davis, Trustee of the Davis Family Blanco Road Property Trust. The
Association acknowledged that this amendment resolved the capacity issue, but asserted it did
not resolve the jurisdictional issue of standing because documentation showed the property
allegedly owned by the Trust, i.e., Lots 6, 7, and 8, were still owned by the Davises and Elare.
The Association therefore filed a motion to dismiss for want of jurisdiction, asserting that
because the Trust was not the property owner, it lacked standing to challenge the restrictive
covenants. The Association also filed a partial motion for summary judgment in which it alleged
the Trust was estopped from invoking the “changed conditions” doctrine as to the 1957 and 1963
deeds because at the time the Davis family acquired Lots 6, 7, and 8, they knew about the
existing conditions on Blanco Road.
On May 27, 2008, the trial court held a hearing on the motion to dismiss and the motion
for partial summary judgment. The trial court granted the Trust’s motion for continuance as to
the partial summary judgment based on lack of notice, but proceeded with the hearing on the
motion to dismiss. At the hearing, and as mentioned above, the Trust introduced into evidence
two unrecorded deeds dated August 13, 2006, but notarized on January 31, 2008. The first deed
conveyed Lot 8 from Edward and Rosaura Davis to the Trust, and the second conveyed Lots 6
and 7 from Elare to the Trust. At the conclusion of the hearing, the trial court granted the motion
to dismiss, dismissing all claims, except the Association’s claims for attorney’s fees. Despite
having dismissed all of the Trust’s claims based on lack of standing, the trial court insisted on
setting a hearing on the Association’s motion for partial summary judgment.
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In accordance with the trial court’s verbal order, the parties set June 3, 2008, as the date
for the hearing on the partial summary judgment. At that hearing, the parties presented an agreed
order, which the trial court signed. In the order, the trial court granted the Association’s partial
motion for summary judgment, and further stated that the Trust should take nothing “on all
claims for declaratory judgment regarding claims that changes in conditions or circumstances as
of the date Plaintiff . . . acquired the property justify the canceling or invalidation of any
restrictive covenants on Plaintiff’s . . . properties as to use for residential purposes.”
In December 2008, the trial court held a hearing on the Association’s request for
sanctions in the form of attorney’s fees. The trial court denied the request for sanctions.
Thereafter, a final judgment was signed on December 18, 2008.
The Trust appealed and, among other things, contested the trial court’s order granting
partial summary judgment. As noted in the introduction, we affirmed the trial court’s order
granting partial summary judgment in favor of the Association and remanded the matter to the
trial court for further proceedings on the Trust’s claims that were not disposed of by the partial
summary judgment. Id.
Upon remand, the Association filed a supplement to its previously filed partial motion for
summary judgment. In the supplemental motion, the Association asserted the only remaining
claims were the Trust’s attacks on the 2001 restrictive covenants as the Trust had agreed to the
granting of the Association’s partial motion for summary judgment, which challenged only the
Trust’s attacks on the 1957 and 1963 covenants based on changed circumstances. The
Association, therefore, filed the supplemental motion for summary judgment to address the
Trust’s requests for declaratory relief as to the 2001 covenants. According to the Trust’s live
pleading, the 2001 covenants were null and void because they were signed only by the
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Association’s officers and directors rather than by a majority of the property owners, or
circumstances and conditions had so changed such that the lots located on Blanco Road should
no longer be restricted to residential use pursuant to the 2001 covenants. The Association also
filed a Third Amended Counterclaim in which it sought attorney’s fees under two theories: (1)
anticipatory breach of the restrictive covenants by the Trust under section 5.006 of the Texas
Property Code; and (2) sanctions under rule 13 of the Texas Rules of Appellate Procedure and
Chapter 10 of the Texas Civil Practice & Remedies Code.
The Trust filed a response to the supplemental motion for summary judgment, attaching
evidence it asserts establishes such a radical change in circumstances as to void the restrictive
covenants. This included an affidavit describing car crashes, destruction of mailboxes, and
commercial growth occurring along Blanco Road. The Trust also filed a response to the Third
Amended Counterclaim.
The trial court granted the Association’s supplemental motion for summary judgment on
April 26, 2011. Pursuant to the judgment, the Trust was to take nothing on its claims, which
were dismissed with prejudice. The trial court did not rule upon the counterclaim at the time the
summary judgment order was signed.
As to the Association’s counterclaim for attorney’s fees, the parties agreed to waive a
jury trial, and a non-jury setting was obtained. The reasonableness of the fees sought by the
Association was not disputed; rather, the Trust disputed the Association’s entitlement to recover
under any of the theories pled in the counterclaim. After an evidentiary hearing, the trial court
took the matter under advisement. Ultimately, the trial court entered a written order, which was
encompassed in the final judgment. Pursuant to the final judgment, the Association was awarded
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$30,000 in attorney’s fees and contingent appellate attorney’s fees under the auspices of section
5.006 of the Texas Property Code.
Following entry of the final judgment, the Trust perfected this appeal. On appeal, the
Trust contends the trial court erred in granting the supplemental motion for summary judgment
and erred in awarding attorney’s fees pursuant to section 5.006 of the Texas Property Code.
ANALYSIS
Summary Judgment
Remaining Claim after First Appeal
Before we address the substance of the summary judgment issue, we must first determine
what claims remained after the first appeal. That is, we must decide what claims were not
disposed of by the original agreed order on the Association’s motion for partial summary
judgment, and thereafter remanded by this court. The parties disagree on what issues remained
after our original opinion. The Association asserts the only claim that remained after remand
was the Trust’s assertion that the 2001 restrictive covenants were null and void because they
were signed only by the Association’s officers and directors rather than by a majority of the
property owners. The Association contends the language of the trial court’s order, which was
quoted by this court in our original opinion, foreclosed any claims as to changed circumstances.
The Trust, however, contends all of its claims remained viable and the agreed order was nothing
more than a statement of Texas law limiting claims of changed circumstances to changes in
conditions that occur after the party seeking to nullify or revise the covenants acquires the
property.
After reviewing the record from both the original appeal and the current appeal, as well
as our first opinion in this matter, we hold the Association is correct, but only in part. We agree
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with the Association that after remand the Trust’s assertion that the 2001 restrictive covenants
were null and void because they were signed only by the Association’s officers and directors
rather than by a majority of the property owners was still viable. 2 However, we hold that
contrary to the Association’s contention, the Trust’s claim that circumstances and conditions had
so changed since the time the Trust acquired Lots 6, 7, and 8 that they should no longer be
restricted to residential use is still viable as to the 2001 restrictive covenants.
Our holding is based on two things. First, the Association’s original partial motion for
summary judgment argued the Trust was precluded from asserting “changed circumstances” only
as to the 1957 and 1963 covenants. There was no mention of, or reference to the 2001 covenants
with regard to changed circumstances. And second, the language in the court’s amended order
on the motion for partial summary judgment. In that order, the trial court granted the
Association’s motion for partial summary judgment, and determined the Trust should take
nothing “on all claims for declaratory judgment regarding claims that changes in conditions or
circumstances as of the date Plaintiff . . . acquired the property justify the canceling or
invalidation of any restrictive covenants on Plaintiff’s . . . properties as to use for residential
purposes.” We shall, therefore, review the summary judgment issue based on this conclusion as
to the remaining claims.
Standard of Review
Additionally, before we can conduct our substantive review of the summary judgment
issue, we must determine the nature of the Association’s motion for summary judgment. See
Sanchez v. Mulvaney, 274 S.W.3d 708, 710 (Tex. App.—San Antonio 2008, no pet.)
(recognizing necessity of determining whether motion for summary judgment was traditional or
2
Notably, however, the Trust has abandoned this claim as it formed no part of its response to the Association’s
supplemental motion for summary judgment, and forms no part of its current appellate argument.
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no evidence motion for summary judgment before undertaking review); Tex. Integrated
Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 375 (Tex. App.—
Dallas 2009, pet. denied) (same). In its motion for summary judgment, the Association asserted
that in order for the Trust to nullify the restrictions based on changed circumstances, the Trust
was required to show that the alleged changes were “so radical and grand” that it was no longer
possible for the trust to secure the benefits sought to be realized by the restrictions within the
protected subdivision. The Association alleged there was no evidence of such a change. We
hold that by this language, the Association moved for a no evidence motion for summary
judgment pursuant to rule 166a(i) of the Texas Rules of Civil Procedure. See TEX. R. CIV. P.
166a(i). Specifically, the Association asserted there was no evidence of grand and radical
changes in circumstances so as to justify nullification of the covenants since 1997 and 2000
when the Davis family first acquired Lots 6, 7, and 8. 3 Therefore, we hold the Association
sought summary judgment on no evidence grounds, arguing there was no evidence of changes in
circumstances that were “so radical and grand” after the Davis family first acquired the property
in 1997 and 2000 that it was no longer possible to secure the benefits sought to be realized by the
restrictions within the protected subdivision. See Tex. Integrated Conveyor Sys., Inc., 300
S.W.3d at 375 (holding court should determine nature of motion for summary judgment, i.e.,
3
It is unclear to the court why the Association asserted in its supplemental motion that the trial court should look to
evidence of changed circumstances from 1997, when Edward and Rosaura Davis acquired Lot 8, and 2000 when
Elare acquired Lots 6 and 7. On appeal, the Association argues the court could only look at evidence of changed
circumstances from August 13, 2006–the date of the deeds from the Davises and Elare to the Trust–or January 31,
2008–the date the deeds were notarized. Though the Association argues 2006 or 2008 are the applicable dates in its
appellate brief, they did not make that argument below. Accordingly, this court must look at any evidence of
changed circumstances produced by the Trust from 1997 onward as this is the argument presented by the
Association in the court below. See Ritchey v. Pinnell, 324 S.W.3d 815, 821 (Tex. App.—Texarkana 2010, no pet.)
(holding that when reviewing order granting summary judgment, appellate court is restricted to arguments expressly
presented to trial court in motion for summary judgment); see also Walden v. Affiliated Computer Servs., Inc., 97
S.W.3d 303, 314 n.7 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (holding summary judgment movant
could not argue on appeal ground for summary judgment not presented to trial court).
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traditional or no evidence, after considering substance of motion, rather than categorizing motion
strictly by its form or title).
The propriety of a no evidence summary judgment is a question of law which we review
de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When
reviewing a no evidence motion for summary judgment, we examine the record in the light most
favorable to the nonmovant. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750 (Tex. 2003);
Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002). However, once a party
properly moves for no evidence summary judgment by specifically asserting that no evidence
exists as to one or more elements of a claim on which the nonmovant would have the burden of
proof at trial, the burden is on the nonmovant to present more than a scintilla of probative
evidence to raise a genuine issue of material fact on each of the challenged elements. TEX. R.
CIV. P. 166a(i); Wal-Mart, 92 S.W.3d at 506. “Less than a scintilla of evidence exists when the
evidence is ‘so weak as to do no more than create a mere surmise or suspicion’ of a fact.” King
Ranch, 118 S.W.3d at 751 (quoting Kindred v. Con/Chem., Inc., 650 S.W.2d 61, 63 (Tex. 1983)).
Applicable Law
It has long been the law in this State that a court may nullify or void a restrictive
covenant limiting property use to residential only when the party seeking to nullify or modify the
restriction proves either: (1) the property owners have acquiesced in violations of the residential
restriction so as to amount to an abandonment of the covenant or a waiver of the right to enforce
it; or (2) as is pertinent in this case, there has been “such a change of conditions in the restricted
area or surrounding it that it is no longer possible to secure in a substantial degree the benefits
sought to be realized through the covenant.” Cowling v. Colligan, 158 Tex. 458, 312 S.W.2d
943, 945 (1958). To justify voiding a residential restriction based on changed circumstances or
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conditions, the courts, including this one, have held the changed conditions must be “radical.”
Simon v. Henrichson, 394 S.W.2d 249, 254 (Tex. Civ. App.—Corpus Christi 1965, writ ref’d
n.r.e.); Lebo v. Johnson, 349 S.W.2d 744, 749-750 (Tex. Civ. App.—San Antonio 1961, writ
ref’d n.r.e.); Hemphill v. Cayce, 197 S.W.2d 137, 141 (Tex. Civ. App.—Fort Worth 1946, no
writ); see Cowling, 321 S.W.2d at 945 (change of conditions must be “great”). In considering
whether such a “radical” change has occurred, courts look to: (1) the size of the restricted area;
(2) the location of the restricted area with respect to where the change has occurred; (3) the type
of change or changes that have occurred; (4) the character and conduct of the parties or their
predecessors in title; (5) the purpose of the restrictions; and (6) to some extent, the unexpired
term of the restrictions. Id. Greater weight is given to changes that occur within the subdivision
than those occurring outside the restricted area. Simon, 394 S.W.2d at 255 (citing Lebo, 349
S.W.2d at 750).
Moreover, a court may not void or modify a residential restriction as to a particular lot
solely on the ground that a change of conditions has rendered that particular lot unsuitable for
residential purposes and it would be unfair to the lot owner to enforce the restriction. Cowling,
312 S.W.2d at 945. Rather, the fairness to the owner of the particular lot is just “one facet of the
judicial inquiry.” Id. The fairness to the lot owner must be weighed against the fairness to the
other lot owners who bought the property in reliance on the restriction and wish to preserve the
character of the area. Id.
As stated by this court in Lebo:
In every growing city it is inevitable that sooner or later commercial and business
areas must come face to face with residential areas, and it is then that the
restrictions are most valuable to the interior lot owners. It is when the outer tier
of lots becomes more valuable for commercial and business purposes that the
restrictions come into play and prevent the residential area from being taken over
by commercial establishments.
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* * *
The front tier lots must bear the brunt of the onslaughts of business and
commerce, otherwise there would be started a system of gradual encroachment
that might swallow up the entire residential area. The other tiers of lots might fall
like ten pins, once the encroachment of commerce and business was begun. One
of the best places to hold the encroachment of business and commerce upon a
restricted residential area is at a highway or street.
349 S.W.2d at 751; see also Scaling v. Sutton, 167 S.W.2d 275, 281 (Tex. Civ. App.—Fort
Worth 1942, writ ref’d w.o.m.) (recognizing domino effect if single lot owner allowed to violate
residential restriction); Bethea v. Lockhart, 127 S.W.2d 1029, 1033 (Tex. App.—San Antonio
1939, writ ref’d) (same).
Additionally, Texas courts have recognized a landowner cannot rely on “changed
conditions” that have already occurred by the time he acquires the property. See, e.g., Oldfield v.
City of Houston, 15 S.W.3d 219, 228 (Tex. App.—Houston [14th Dist.] 2000, pet. denied),
superseded by statute on other grounds as recognized in Truong v. City of Houston, 99 S.W.3d
204 (Tex. App.—Houston [1st Dist.] 2002, no pet.); Traeger v. Lorenz, 749 S.W.2d 249, 250
(Tex. App.—San Antonio 1988, no writ) (citing Lebo, 349 S.W.2d at 750); Ortiz v. Jeter, 479
S.W.2d 752, 758 (Tex. App.—San Antonio 1972, writ ref’d n.r.e.); Davis v. Hinton, 374 S.W.2d
723, 728 (Tex. Civ. App.—Tyler 1964, writ ref’d n.r.e.).
Application
Because the Association alleged no evidence of changes in circumstances that were “so
radical and grand” after the Davis family first acquired the property in the subdivision in 1997
and 2000 that it was no longer possible to secure the benefits sought to be realized by the
restrictions within the protected subdivision, it was incumbent upon the Trust to present more
than a scintilla of probative evidence to raise a genuine issue of material fact on this element.
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See TEX. R. CIV. P. 166a(i); Wal-Mart, 92 S.W.3d at 506. In doing so, the Trust has to present
evidence that created more than mere surmise or suspicion of a radical change. See King Ranch,
118 S.W.3d at 751.
In response to the Association’s no evidence motion, the Trust argued and submitted
evidence attempting to show a radical change of circumstances that made it impossible to secure
in a substantial degree the benefits sought to be realized through the covenant. The Trust
submitted evidence showing that when the Davis family first purchased Lot 8, Blanco Road was
merely a two-lane road. However, Luis Davis admitted Loop 1604 and Blanco Road were
already in existence, and before the purchase of Lots 6 and 7, the family knew of the City of San
Antonio’s intent to widen Blanco Road. The Trust also presented evidence that since the
purchase of the property by the Davis family: (1) motorists exceed the speed limit on Blanco
Road, and Luis Davis had witnessed “various speeding motorists almost lose control of their
vehicles; (2) Luis Davis’s mailbox had been rundown “no less than seven” times by speeding
motorists; (3) in July 2007, a speeding motorist crashed into a tree on Lots 6 and 7; (4) in
November 2007, a speeding motorist crashed into a tree in a neighbor’s yard; (5) in October
2009, there was a collision between two vehicles on Blanco Road and one of the roads leading
into the subdivision, and the occupants of the vehicles were taken to the hospital; and (6) there
had been an “explosion” of commercial businesses along Blanco Road since it was widened,
including HEB, Bank of America, McDonald’s, Sonic, Papa John’s, Starbucks, Pizza Hut, Jim’s,
J.P. Morgan Chase Bank, and a self-storage facility. Thus, the Trust argues, it is not simply the
increased traffic or commercial growth, but the danger created by those conditions that warrant
voiding the residential restrictive covenant. The Trust asserts this evidence is more than a
scintilla of evidence of changes in circumstances that were “so radical and grand” that it was no
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longer possible to secure the benefits sought to be realized by the restrictions within Canyon
Creek Estates.
This court stated in Lebo that while the rule is plain, i.e., residential only restrictions will
not be abrogated absent proof of a radical change that makes it impossible to secure in a
substantial degree the benefits sought to be realized through the covenant, the difficulty arises
when it is necessary to apply the rule to the facts of a particular case. 349 S.W.2d at 749. The
court noted that the facts are always different, and no two cases are identical. Id. Accordingly,
no hard and fast rule can be laid down as to just when, due to changed conditions, it is no longer
possible to accomplish the original development plan. Id.
We must therefore decide, based on the particular facts of this case as established by the
Trust’s summary judgment evidence, whether since the Davis family acquired the property in the
subdivision in 1997 and 2000 there is more than a scintilla of evidence that there has been such a
radical change in conditions that it is no longer possible to secure in a substantial degree the
benefits sought to be realized through the residential restriction. See Cowling, 312 S.W.2d at
945; Simon, 394 S.W.2d at 254; Lebo, 349 S.W.2d at 749-750; Hemphill, 197 S.W.2d at 141. As
set forth above, in determining whether there has been a “radical” change, we consider: (1) the
size of the restricted area; (2) the location of the restricted area with respect to where the change
has occurred; (3) the type of change or changes that have occurred; (4) the character and conduct
of the parties or their predecessors in title; (5) the purpose of the restrictions; and (6) to some
extent, the unexpired term of the restrictions. Id.
We must also keep in mind that the law states increased commercial growth and increases
in traffic and congestion in streets bounding a restricted subdivision are alone insufficient to
warrant nullification of the residential restriction. Hemphill, 197 S.W.2d at 141.
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Having reviewed the Trust’s summary judgment evidence in the light most favorable to
the Trust, and in light of the factors set forth in the relevant case law, we hold the Trust has not
presented even a scintilla of evidence to show changes in circumstances “so radical and grand”
that it was no longer possible for the Davis family or any other homeowner to secure the benefits
sought to be realized by the restrictions within Canyon Creek Estates. See King Ranch, 118
S.W.3d at 750; Wal-Mart, 92 S.W.3d at 506. Although the Trust did present evidence of
changed circumstances, there was no evidence to establish the homeowners could no longer
secure the benefits secured by the residential only restriction imposed by the Association.
Accordingly, we overrule the Trust’s first issue and hold the trial court did not err in granting
summary judgment in favor of the Association.
Attorney’s Fees
After remand, the Association filed its Third Amended Counterclaim. The Association
sought attorney’s fees under section 5.006 of the Texas Property Code, contending the Trust had
engaged in anticipatory breach of the restrictive covenants, thereby entitling the Association to
attorney’s fees. See TEX. PROP. CODE ANN. § 5.006 (West 2004). The Association also sought
attorney’s fees in the form of sanctions under rule 13 of the Texas Rules of Civil Procedure and
Chapter 10 of the Texas Civil Practice and Remedies Code. See TEX. R. CIV. P. 13; TEX. CIV.
PRAC. & REM. CODE ANN. § 10.001, et. seq. (West 2002). However, the trial court denied the
Association recovery under rule 13 and Chapter 10, and it specifically awarded attorney’s fees,
both through trial and in the event of successful appeals, pursuant only to section 5.006 of the
Property Code. On appeal, the Trust contends the trial court erred in awarding attorney’s fees to
the Association under section 5.006. The Trust does not challenge the reasonableness of the
attorney’s fees awarded to the Association, but challenges only the Association’s right to recover
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fees at all. See Aquila Sw. Pipeline, Inc. v. Harmony Exploration, Inc., 48 S.W.3d 225, 240-41
(Tex. App.—San Antonio 2001, pet. denied) (noting that when party challenges reasonableness
of attorney’s fees, court may look at sufficiency of evidence to support amount of fees).
Following the trial court’s grant of the Association’s supplemental motion for summary
judgment, the trial court held a hearing on the Association’s counterclaim and request for
sanctions. It is undisputed that the parties waived their right to a jury trial on the counterclaim
and trial was to the court. At the beginning of the hearing, both the Association and the Trust
asked the court to take judicial notice of the court’s file, which the trial court agreed to do.
Section 5.006 of the Property Code provides:
In an action based on breach of a restrictive covenant pertaining to real property,
the court shall allow a prevailing party who asserted the action reasonable
attorney’s fees in addition to the party’s costs and claim.
TEX. PROP. CODE ANN. § 5.006. In explaining its counterclaim of anticipatory breach, the
Association stated at the hearing that the Trust:
. . . made it clear that they [sic] want to use Lots 6, 7, and 8 for nonresidential
purposes in breach of the restrictive covenants. Canyon Creek is the prevailing
party to the extent of the agreed order and is the prevailing party on the remaining
claim, if any. [The Trustee] had engaged in anticipatory breach of the restrictive
covenants and this counterclaim is, therefore, based on breach of the restrictive
covenants pertaining to real property. In other words an anticipatory breach,
because they’ve [sic] made it very clear, if we can win this suit, we intend to go
commercial.
On appeal, the Trust first argues the Association cannot recover fees under section 5.006
because the Association failed to introduce any evidence of an anticipatory breach of the
restrictive covenant by the Trust. More specifically, the Trust contends the Association did not
enter any evidence into the record at the hearing, other than a letter from the Trust’s counsel
contending our opinion did not dispose of any of the Trust’s claims, in support of its
counterclaim. We disagree with this contention. As noted above, the Association asked the trial
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court to take judicial notice of the entire file, which the trial court did, and then argued that based
on documents in that file, the Trust committed an anticipatory breach. There was, therefore,
evidence introduced at the hearing–whether this evidence establishes the Association’s right to
recover under section 5.006 is a separate question.
The Trust next argues that even if evidence was introduced of its intention to have Lots 6,
7, and 8 rezoned for commercial use, or that the Trust filed this suit in an effort to void the
restrictions so that it could put the property to commercial use, this was not evidence of
anticipatory breach of the restrictive covenants. To the contrary, the Trust argues, this was
actually evidence of the Trust’s willingness to abide by the residential restriction until it could be
legally removed, negating repudiation of the covenants.
We believe the question is this: was evidence of the Trust’s efforts to change the property
from residential use to commercial use by seeking to have the property rezoned or by filing suit
to nullify the residential restriction based on changed circumstances evidence of anticipatory
breach so as to entitle the Association to recover attorney’s fees under section 5.006 of the
Property Code? We hold it is not.
A restrictive covenant is a contract subject to the same rules of construction and
interpretation as any other contract. Dynamic Pub. & Distrib. L.L.C. v. Unitec Indus. Ctr. Prop.
Owners Ass’n, Inc., 167 S.W.3d 341, 345 (Tex. App.—San Antonio 2005, no pet.). With regard
to anticipatory breaches of a contract, it has long been the law in Texas that before there can be
an anticipatory breach, there must be an unconditional declaration of an intention not to perform
the contract. Pollack v. Pollack, 39 S.W.2d 853, 857 (Tex. Comm’n App. 1931, holdings
approved), reh’g denied, 46 S.W.2d 292 (1932); Moore v. Jenkins, 109 Tex. 461, 211 S.W. 975,
976 (1919); Kilgore v. Nw. Tex. Baptist Educational Society, 90 Tex. 139, 37 S.W. 598, 600
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(1896); McKenzie v. Farr, 541 S.W.2d 879, 882 (Tex. Civ. App.—Beaumont 1976, writ ref’d
n.r.e.). The repudiation must be a distinct, positive, unequivocal, and absolute refusal to perform
the contract in the future. El Paso Prod. Co. v. Valence Operating Co., 112 S.W.3d 616, 621
(Tex. App.—Houston [1st Dist.] 2003, pet. denied) (citing Van Polen v. Wisch, 23 S.W.3d 510,
516 (Tex. App.—Houston [1st Dist.] 2000, pet. denied)); Jenkins v. Jenkins, 991 S.W.2d 440,
447 (Tex. App.—Fort Worth 1999, pet. denied). The party who is alleged to have committed an
anticipatory breach must show a fixed intention to abandon, renounce, and refuse to perform the
contract. Jenkins, 991 S.W.2d at 447. As stated in 1896 by the supreme court in Kilgore:
But a mere assertion that the party will be unable or will refuse to perform his
contract is not sufficient. It must be a distinct and unequivocal absolute refusal to
perform the promise[.]
37 S.W. at 600.
Based on the record before us, there is no evidence of anticipatory breach by the Trust.
The evidence in the record shows only that the Trust sought legal avenues to remove the
residential restriction through rezoning and by filing suit to nullify the restriction based on
changed circumstances. We hold this is not evidence of a distinct, positive, unequivocal, and
absolute refusal to abide by the residential restriction. See El Paso Prod. Co., 112 S.W.3d at 621
(citing Van Polen, 23 S.W.3d at 516; Jenkins, 991 S.W.2d at 447. To the contrary, the Trust’s
efforts to remove the restriction in a valid, legal manner establishes its recognition that the
property cannot currently be used for any purpose other than residential. It is, in fact, evidence
of the Trust’s intent to abide by the restriction if it ultimately fails in its legal attempts to change
it.
The evidence relied upon by the Association merely showed the Trust’s desire to legally
alter the current restriction; it does not establish an intent to refuse to abide by the residential
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restriction. Accordingly, we sustain the Trust’s second issue and hold the portion of the
judgment awarding attorney’s fees must be reversed.
CONCLUSION
Based on the foregoing, we affirm the trial court’s summary judgment in favor of the
Association, but reverse and render judgment in favor of the Trust on the Association’s claim for
attorney’s fees.
Marialyn Barnard, Justice
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